When the U.S. Federal Reserve unexpectedly cut the discount rate at 8:15 a.m. New York time, futures on the Standard & Poor's 500 Index soared 3.6 percent in 46 seconds, erasing a 0.4 percent decline. Within 15 minutes, Europe's Dow Jones Stoxx 600 Index was up 2.4 percent as the Fed demonstrated it would act to ease the credit crunch that began two months ago when defaults by subprime borrowers brought down two Bear Stearns Cos. hedge funds.
Finally, insider buying is at levels last seen right before the bull market took off in 2003. These reading are all indicative of a market that is at a meaningful bottom. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less pessimism, subsiding credit fears, overseas gains and bargain hunting.